CESTAT Weekly Round-Up [Jan 27 to Jan 30, 2025]

This weekly round-up analytically summarizes the key stories related to the Customs Excise and Service Tax Appellate Tribunal (CESTAT) reported at Taxscan from 27 January 2025 to   January 30 2025.

No Service Tax Payable by Standard Chartered Bank India on Allocation of General Administrative Expenses by Head Office: CESTAT

Standard Chartered Bank vs Commissioner of CGST & CX Mumbai South CITATION: 2025 TAXSCAN (CESTAT) 180

The Mumbai Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that service tax is not payable by Standard Chartered Bank India on allocation of head office executive and general administrative expenses’ by the head office.

SCB-UK, the head office, incurs a number of expenses under different headings to support all of its global branches, including advertising, auditing fees, donations, entertainment, gross emoluments, insurance, legal professional fees, national insurance contributions, pension contributions, postage, telephone, telegraph, printing, stationery, publication, newspapers, rent & rates, subscriptions, travel expenses, machinery, furniture, computer, microfilm, and other miscellaneous expenses.

Relief to Axis Bank:  CESTAT Allows CENVAT Credit on Tax Paid on Premium Mandatorily Required for Functioning as Bank

Axis Bank Ltd vs Commissioner of Service Tax - V CITATION: 2025 TAXSCAN (CESTAT) 179

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has granted Axis Bank CENVAT Credit on taxes paid on premiums that are necessary for banks to operate.

The Reserve Bank of India (RBI) oversees banks, and the bench of C J Mathew (Technical Member) and Ajay Sharma (Judicial Member) has noted that CENVAT credit is available on tax paid on premiums that are mandatory for banks to operate. In accepting the appeal, the tribunal found that the insurance service provided to banks by the Deposit Insurance Corporation is a “input service” and that banks are permitted to use the Cenvat credit of service tax they have paid for this service to provide “output services.”

Service Tax SCN turns Invalid if Assessee Paid Tax Liability Along with Interest before issuance of SCN: CESTAT

Jayhind Buildcon Pvt Ltd vs Commissioner of C.E. & S.T.-Rajkot CITATION: 2025 TAXSCAN (CESTAT) 181

In a recent case, the Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held a show cause notice (SCN) demanding Service Tax turns invalid if the assessee had paid tax liability along with interest before issuance of SCN.

A show cause notice dated 31.08.2018 demanding the service tax of Rs. 40,65,565/-, for the same period as audit, by invoking extended period of limitation, was issued. The appellant had already deposited service tax amounting to Rs. 40Lakh as duty noted in the show cause notice and interest amounting to Rs. 6,34,560/- before issuance of show cause notice. The adjudicating authority has confirmed demand of Rs. 46,65,565/- and have also imposed mandatory penalty of Rs. 40,65,565/- under Section 78 of the Finance Act, 1994, against which the appellant filed an appeal before the Commissioner (Appeals) who has rejected the appeal.

Rejection of Application for Brand Rate  for Exported Goods Under Duty Drawback Rules solely on Limitation: CESTAT Remands Matter for Reconsideration

John Deere India Pvt Ltd vs Commissioner of Customs CITATION: 2025 TAXSCAN (CESTAT) 182

In a recent case on the issue of rejection of an Application for brand rate for exported goods under duty drawback rules solely on limitation, the Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) remanded the matter for reconsideration.

As the deemed date of extension stands altered owing to its necessity before any further processing can be done, the Commissioner of Customs would need to ascertain compliance with rule 7 of Customs and Central Excise Duties Drawback Rules, 2017 to initiate the disposal of application which includes consideration of the ground for condonation of delay.  The CESTAT sets aside the impugned order of rejection and direct the applications to be placed once again before the competent authority to determine the limitation period for application for brand rate.

Cenvat Credit Refund Hit by unjust enrichment When incidence of duty passed on to customers: CESTAT

M/s Jammu & Kashmir Cements Ltd vs Commissioner of Central Excise CITATION: 2025 TAXSCAN (CESTAT) 183

In a recent case, the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) Chandigarh bench  held that Cenvat Credit refund hit by unjust enrichment when incidence of duty passed on to customers.The Tribunal viewed that it is incumbent upon the appellants who are claiming refund to satisfy the authorities with evidence to substantiate the quantum and fact of their clearances to institutional customers.

The Tribunal viewed that it is incumbent upon the appellants who are claiming refund to satisfy the authorities with evidence to substantiate the quantum and fact of their clearances to institutional customers. Also as regards the issue of unjust enrichment, Consultant for the appellants submitted that he can provide certificates/ affidavits to prove that their institutional customers i.e army/ Government agencies etc. have not availed CENVAT credit.

Issue on Compliance of Rule 6 of CCR: CESTAT Sets aside Demand Order issued against Mahindra & Mahindra Ltd

M/s Mahindra & Mahindra Ltd. vs Commissioner of Central Excise CITATION: 2025 TAXSCAN (CESTAT) 184

The Mumbai bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) set aside the demand order issued against Mahindra & Mahindra Ltd for non compliance of Rule 6 of the Cenvat Credit Rules ( CCR ), 2004. The bench remanded the matter to the original authority for ascertain the fact as to whether, the appellants had reversed the common input services at the time of issuance of invoices by the ISD

The period of dispute involved in the present case is from April, 2009 to March, 2013 and April, 2013 to June, 2013. The Department had issued the show-cause notices dated 11.03.2014 and 05.05.2014, seeking for confirmation of the demands in respect of the said period. The appellants in the present appeals have pleaded that the activity of ‘trading’ was not an exempted service prior to 01.04.2011 and there were divergent views with regard to such activity, whether to be considered as ‘exempted service’ or ‘otherwise’. Therefore, they have pleaded that though the CENVAT credit availed on the basis of ISD invoices were reflected in the books of account, but the said particulars were not captured in the periodical returns i.e., ER1 filed before the jurisdictional Central Excise authorities.

CESTAT Allows Larsen & Toubro Ltd. to utilize common Cenvat Credit account for payment of Service Tax on output services provided

M/s. Larsen & Toubro Limited vs Commissioner of Central Excise, Customs & Service Tax CITATION: 2025 TAXSCAN (CESTAT) 185

In a case, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT)Kolkata bench held that   Larsen & Toubro Limited, the appellant can utilize common Cenvat Credit account for payment of Service Tax on output services provided  by them. It was observed that there is no bar on the utilization of CENVAT credit availed on input services for payment of tax on excisable goods so manufactured and cleared.

In the case of CCE v. S.S. Engineers 2016 it was observed that “Cenvat credit of input services-utilization thereof cross utilization no infirmity in Tribunal findings that the said credit can be utilized for payment of excise duty on goods manufactured by assessee and that such cross-utilization is neither barred nor prohibited accounting problems in such cases has been taken care of in CBEC circular dated 30-3-2010 aforesaid interpretation of Cenvat Credit Rules by Tribunal being probable and possible, is not perverse No substantive question of law, having been raised, Revenue’s appeal dismissed Rule 3 and 7 of Cenvat Credit Rules/2004.”

Provision of S. 11BB of Excise Act not applicable for Claiming Interest on Pre-Deposit: CESTAT

M/s Amkap Marketing Pvt. Ltd. VS Commissioner of Central Excise & CGST CITATION: 2025 TAXSCAN (CESTAT) 186

The Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has ruled that section 11BB of the Central Excise Act, which stipulates interest on delayed refunds, would not apply because there is no statutory mechanism for demanding interest on pre-deposits.

The Additional Commissioner upheld the duty claim of Rs. 45,31,574 /- under Section 11A of the 1944 Act in the aforementioned ruling, and the petitioners were held accountable for paying the amount due, plus interest, in compliance with Section 11AB of the same Act. Additional directives were drafted for the seizure of Rs. 44,96,000 in cash and the imposition of Rs. 45,31,574 in money penalties. The sum of Rs. 20,00,000 that the petitioners had placed while the SCN procedures were pending was also taken away in relation to the demands that had become crystallized.

Volvo can Import Internal Combustion Engines In Absence of Restriction in DFIA License: CESTAT

M/s.Volvo India Private Ltd vs The Commissioner of Customs CITATION: 2025 TAXSCAN (CESTAT) 188

In a ruling in favour of Volvo India Pvt Ltd, the Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has allowed the appellant to import internal combustion engines in the absence of restriction in the Dutyfree Import Authorization (DFIA) License. The bench further viewed that the assessee cannot be expected to correlate its imports with the exports of the person to whom the license was originally issued.

The exemption from Customs duty in respect of imports against DFIA licences are governed by Notification No. 98/2009-Cus dated 11.09.2009. To the extent relevant, this notification stipulates that the exemption shall be granted provided that the description, value and quantity of materials imported are covered by the authorization, and the authorization is produced before the proper officer at the time of clearance. Certain additional restrictions are in place in respect of products specified in paragraph 4.32.3 of the Handbook of Procedures (Vol. I) of the Foreign Trade Policy (FTP).

SCN Demanding Service Tax on Alleged Wrongful Availment of Credit after Three Years is Not Valid: CESTAT

M/s.Xomox Sanmar Ltd vs The Commissioner of GST & Central Excise CITATION: 2025 TAXSCAN (CESTAT) 189

In a recent case, the Chennai Bench Of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the action of the department in proposing and demanding service tax on alleged wrongful availment of  credit by invoking the extended period of limitation after 3 years is not justified.

The tribunal determined that the appellant’s use of the ineligible credit made it abundantly evident that the recovery of the credit called for the application of an extended statute of limitations. On the other hand observed  that the Revenue has not satisfactorily proved the invoking of extended period of limitation while raising the impugned demand and the order that has upheld the above demand cannot sustain, for which reason, I set aside the same on limitation alone.

Appellate Authority can Condone Delay upto 30 Days as per Finance Act: CESTAT

Shri Santhosh Kumar Shetty Saja vs The Principal Commissioner of Central Excise and Central Tax CITATION: 2025 TAXSCAN (CESTAT) 187

The Bangalore Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that appellate authority can condone delay upto 30 Days as per Finance Act, 1994  after the expiry of 60 days which is the normal period for preferring appeal.

While dismissing the appeal, the tribunal noted that the appeal must be filed within 60 days, but under the proviso, the appellate authority may provide an additional 30 days to hear the case. Section 35’s proviso to sub-section (1) makes it abundantly evident that the appellate body lacks the ability to permit the appeal to be presented after the 30-day limit. The wording makes it apparent that the legislature wanted the appellate authority to consider the appeal and only allow a delay of up to 30 days following the 60-day time that is typically allotted for prioritizing appeals.

“Premium” or “Salami”  Value is Exigible to Service Tax under “Renting of Immovable Property”: CESTAT

Rajasthan State Industrial Development & Investment Corporation Ltd - The Commissioner CITATION:   2025 TAXSCAN (CESTAT) 190

As per the ruling of the  Delhi Bench Of Customs, Excise and Service Tax Appellate Tribunal (CESTAT), the value of “premium” or “salami” is subject to service tax under “renting of immovable property” for the time period before July 1, 2012, under section 65(105)(zzzz) of the Finance Act, and starting on July 1, 2012, under section 66B of the Finance Act.

Renting of immovable property” is a “declared service” under section 66E of the Finance Act. Once “renting of immovable property” is a declared service and so taxable under section 66B of the Finance Act, it cannot be contended by the appellant that it will also be included in those services which are excluded under section 65B (44) of the Finance Act, for it can never be the intention of the legislature to include a “service” as exigible to service tax and at the same time also exclude that “service” from taxability.

Import of Refrigerant Gas in Cylinder Requires Permission from Controller Of Explosive: CESTAT dismisses Appeal of CONCOR India

M/s. Container Corporation of India Ltd vs Commissioner of Customs CITATION: 2025 TAXSCAN (CESTAT) 194

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in a recent case has held that the import of refrigerant gas in cylinders requires permission from the controller of explosives. The Tribunal further upheld the penalty on Container Corporation of India (CCI) for misdeclaration and dismissed the appeal of CONCOR India.

The appellant has not shown any proof that the container was either broken or lacked a seal when the items were placed in their custody, according to the two-member bench of Binu Tamta (Judicial Member). The Delhi High Court has already addressed the appellant’s argument that the commodities were in CISF deployment, ruling that the appellant cannot avoid this burden by placing the blame on the CISF.

Full Excise Duty not Demandable for Period of Non Operation of Machines: CESTAT rules in favour of Gutka Manufacturer

Maruti Tabacco Products P Limited vs Commissioner of Central Excise & ST CITATION: 2025 TAXSCAN (CESTAT) 192

In a ruling in favour of Gutka Manufacturer, the Ahmedabad Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that full excise duty cannot be demanded for the period when the machines were not in operation.

According to the CESTAT, the appellant gave the Department adequate notice whenever they wished to stop a number of machines from operating, and the jurisdictional superintendent of the range sealed the machines. The appellant then notified the department when the machines were made operational, and they only began operating the machines after the officers had de-sealed them.

Adjustment of Refund against Confirmed Demand During Pendency of Appeal is not Permissible: CESTAT

M/s Indus Towers Limited vs Commissioner of Central Excise CITATION:   2025 TAXSCAN (CESTAT) 191

In a recent case, the Allahabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has observed that adjustment of refund against a confirmed demand during the pendency of an appeal is not permissible as it amounts to coercive recovery.

Regarding the adjustment of the amount Rs.64,73,631/- from the total refund sanctioned to the appellant, the Adjudicating Authority has committed an error because the said demand was not confirmed by the Appellate Authority rather the said demand was set aside by the Appellate Authority in the case of Bharti Infratel Ltd.

Service Tax Not Payable by Bharti Airtel on Free Allowance Given to Employees: CESTAT

Bharti Airtel Ltd vs Commissioner of Central Goods & Service Tax CITATION: 2025 TAXSCAN (CESTAT) 193

In an important ruling, the Chandigarh Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that service tax is not payable by Bharati Airtel on the free allowance given to the employees which is in the nature of discount/concession.The tribunal allowed the appeal of Bharti Airtel and quashed the order.

According to the Tribunal, money is only written off when it is considered a receivable and has not been received despite a serious effort. In its books of accounts, the appellant has recorded the monies as receivable. In these situations, the assessable value solely includes the actual consideration received or receivable.

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